On track to meet company-wide annual production and cost guidance
Tasiast Phase One commissioning complete; construction of U.S. and Russia projects on schedule
TORONTO, Nov. 07, 2018 (GLOBE NEWSWIRE) -- Kinross Gold Corporation (TSX: K, NYSE: KGC) today announced its
results for the third-quarter ended September 30, 2018.
(This news release contains forward-looking information about expected future events and financial and
operating performance of the Company. We refer to the risks and assumptions set out in our Cautionary Statement on Forward-Looking
Information located on page 18 of this release. All dollar amounts are expressed in U.S. dollars, unless otherwise noted.)
2018 third-quarter
highlights:
- Production1: 586,260 gold equivalent ounces (Au eq. oz.), compared with 653,993 Au eq. oz. in Q3
2017.
- Gold equivalent ounces sold: 618,463 Au eq. oz. compared with 638,659 Au eq. oz. sold in Q3 2017.
- Revenue: $753.9 million, compared with $828.0 million in Q3 2017.
- Production cost of sales2: $777 per Au eq. oz., compared with $662 in Q3 2017.
- All-in sustaining cost2: $1,049 per Au eq. oz. sold, compared with $937 in Q3 2017. All-in
sustaining cost per gold ounce (Au oz.) sold on a by-product basis was $1,046 in Q3 2018, compared with $927 in Q3 2017.
- Operating cash flow: $127.2 million, compared with $197.7 million in Q3 2017.
- Adjusted operating cash flow2: $143.2 million, compared with $320.8 million in Q3 2017.
- Reported net earnings/loss3: loss of 104.4 million, or $0.08 per share, compared with net
earnings of $60.1 million, or $0.05 per share, in Q3 2017.
- Adjusted net earnings/loss2,3: loss of $48.4 million, or $0.04 per share, compared with adjusted
net earnings of $84.1 million, or $0.07 per share, in Q3 2017.
-
Organic projects and development opportunities:
- Tasiast expansion: Phase One SAG mill commissioning has been completed. The Company continues to assess
alternative throughput approaches to expand Tasiast and advanced discussions with the Government of Mauritania. Kinross also
advanced project financing activities during the quarter.
- Round Mountain Phase W project: On schedule and on budget, with initial ore expected in
mid-2019.
- Fort Knox Gilmore project: On schedule and on budget, with initial production expected
in early 2020.
- Bald Mountain Vantage Complex project: On schedule and on budget, as stripping and
stacking on the new heap leach pad have now commenced. On October 2, 2018, the Company acquired the remaining 50% interest in
the Bald Mountain Exploration Joint Venture that it did not already own from Barrick Gold for consideration including $15.5
million in cash and a 1.25% net smelter royalty, giving Kinross 100% ownership of the entire Bald Mountain land package.
- Russia satellite projects: The Moroshka project was completed as production commenced
at the high-grade deposit located near Kupol. Development at Dvoinoye Zone 1 is proceeding as planned.
- Chile projects: The La Coipa Restart project feasibility study remains on schedule to
be completed in the second half of 2019, with permitting now complete for the project. The Lobo Marte
scoping study also remains on schedule, and is expected to be completed in the first half of 2019.
- Outlook: Kinross expects to produce 2.5 million Au eq. oz. (+/- 5%) at a production cost of sales per Au eq.
oz. of $730 (+/- 5%) and all-in sustaining cost of $975 (+/- 5%) per ounce sold on both a gold equivalent and by-product basis
for 2018. Total capital expenditures are forecast to be approximately $1,075 million (+/- 5%).
- Balance sheet: As of September 30, 2018, Kinross had cash and cash equivalents of $470.1 million and
available credit of $1,554.3 million, for total liquidity of approximately $2.0 billion, and no debt maturities until 2021.
- Board Chair update: John Oliver has announced he will retire from his role as Board Chair effective
December 31, 2018. Catherine McLeod-Seltzer, a Board member since 2005, has been appointed the new Independent Chair effective
January 1, 2019.
CEO Commentary
J. Paul Rollinson, President and CEO, made the following comments in relation to 2018 third-quarter
results:
“During the first nine months of 2018, our global portfolio of mines achieved solid production and generated
robust cash flow. Our Nevada, Brazil, Ghana and Russia operations performed well during the quarter and we remain on track to meet
our company-wide production and cost guidance for the year.
“Commissioning of the new SAG mill for the Tasiast Phase One expansion has been completed. Performance at
Tasiast is expected to further improve in the fourth quarter, as the mine delivered record monthly production in October and began
mining higher grade ore. We also continue to advance discussions with the Government of Mauritania regarding our operations in the
country and have now signed mandate letters with Export Development Canada (EDC) and the International Finance Corporation (IFC), a
division of the World Bank, regarding project financing.
“Construction at our U.S. projects – Round Mountain Phase W and Bald Mountain Vantage Complex in Nevada and Fort
Knox Gilmore in Alaska – remain on schedule and on budget as we continue to solidify our production footprint in the country. In
Russia, the Moroskha project was completed and production commenced at the high-grade satellite deposit near Kupol, while our
studies assessing a return to long-term production in Chile are proceeding well.”
Financial results
Summary of financial and operating results
|
|
Three months
ended |
Nine months ended |
|
|
September
30, |
September 30, |
(in millions, except
ounces, per share amounts, and per ounce amounts) |
2018 |
2017 |
2018 |
2017 |
Operating Highlights |
|
|
|
|
|
Total gold equivalent
ounces(a) |
|
|
|
|
|
Produced(c) |
591,928 |
660,564 |
1,859,789 |
2,038,797 |
Sold(c) |
623,854 |
645,235 |
1,891,811 |
1,987,113 |
|
|
|
|
|
|
Attributable gold equivalent
ounces(a) |
|
|
|
|
Produced(c) |
586,260 |
653,993 |
1,842,246 |
2,020,823 |
Sold(c) |
618,463 |
638,659 |
1,874,236 |
1,968,189 |
|
|
|
|
|
|
Financial Highlights |
|
|
|
|
|
Metal sales |
|
$ |
|
753.9 |
|
$ |
828.0 |
|
$ |
2,426.1 |
|
$ |
2,492.7 |
Production cost of sales |
|
$ |
|
484.6 |
|
$ |
427.5 |
|
$ |
1,384.1 |
|
$ |
1,342.9 |
Depreciation, depletion and amortization |
|
$ |
|
204.7 |
|
$ |
207.6 |
|
$ |
588.1 |
|
$ |
629.1 |
Operating earnings (loss) |
|
$ |
|
(48.8) |
|
$ |
80.1 |
|
$ |
175.4 |
|
$ |
233.6 |
Net earnings (loss) attributable to common shareholders |
|
$ |
|
(104.4) |
|
$ |
60.1 |
|
$ |
4.1 |
|
$ |
227.8 |
Basic earnings (loss) per share attributable to common
shareholders |
|
$ |
|
(0.08) |
|
$ |
0.05 |
|
$ |
0.00 |
|
$ |
0.18 |
Diluted earnings (loss) per share attributable to common
shareholders |
|
$ |
|
(0.08) |
|
$ |
0.05 |
|
$ |
0.00 |
|
$ |
0.18 |
Adjusted net earnings (loss) attributable to common
shareholders(b) |
|
$ |
|
(48.4) |
|
$ |
84.1 |
|
$ |
114.6 |
|
$ |
162.4 |
Adjusted net earnings (loss) per share(b) |
|
$ |
|
(0.04) |
|
$ |
0.07 |
|
$ |
0.09 |
|
$ |
0.13 |
Net cash flow provided from operating activities |
|
$ |
|
127.2 |
|
$ |
197.7 |
|
$ |
605.2 |
|
$ |
585.2 |
Adjusted operating cash flow(b) |
|
$ |
|
143.2 |
|
$ |
320.8 |
|
$ |
738.4 |
|
$ |
802.5 |
Capital expenditures |
|
$ |
|
276.4 |
|
$ |
204.7 |
|
$ |
770.4 |
|
$ |
584.3 |
Average realized gold price per ounce(d) |
|
$ |
|
1,209 |
|
$ |
1,283 |
|
$ |
1,283 |
|
$ |
1,254 |
Consolidated production cost of sales per equivalent
ounce(c) sold(b) |
|
$ |
|
777 |
|
$ |
663 |
|
$ |
732 |
|
$ |
676 |
Attributable(a) production cost of sales per
equivalent ounce(c) sold(b) |
|
$ |
|
777 |
|
$ |
662 |
|
$ |
731 |
|
$ |
674 |
Attributable(a) production cost of sales per ounce
sold on a by-product basis(b) |
|
$ |
|
768 |
|
$ |
645 |
|
$ |
719 |
|
$ |
658 |
Attributable(a) all-in sustaining cost per ounce
sold on a by-product basis(b) |
|
$ |
|
1,046 |
|
$ |
927 |
|
$ |
960 |
|
$ |
924 |
Attributable(a) all-in sustaining cost per
equivalent ounce(c) sold(b) |
|
$ |
|
1,049 |
|
$ |
937 |
|
$ |
967 |
|
$ |
933 |
Attributable(a) all-in cost per ounce sold on a
by-product basis(b) |
|
$ |
|
1,360 |
|
$ |
1,155 |
|
$ |
1,270 |
|
$ |
1,117 |
Attributable(a) all-in cost per equivalent ounce(c) sold(b) |
|
$ |
|
1,356 |
|
$ |
1,158 |
|
$ |
1,270 |
|
$ |
1,121 |
- "Total" includes 100% of Chirano production. "Attributable" includes Kinross' share of Chirano (90%)
production.
- The definition and reconciliation of these non-GAAP financial measures is included on pages 13 to 17 of this news
release.
- "Gold equivalent ounces" include silver ounces produced and sold converted to a gold equivalent based on a ratio of the
average spot market prices for the commodities for each period. The ratio for the third quarter of 2018 was 80.80:1 (third
quarter of 2017 - 75.91:1). The ratio for the first nine months of 2018 was 79.65:1 (first nine months of 2017 -
72.94:1).
- The definition of this non-GAAP financial measure is included on pages 13 to 17 of this news release.
The following operating and financial results are based on third quarter 2018 gold equivalent production.
Production and cost measures are on an attributable basis:
Production: Kinross produced 586,260 attributable Au eq. oz. in Q3 of 2018, compared with
653,993 Au eq. oz. in Q3 2017.
Gold equivalent ounces sold: Kinross sold 618,463 Au eq. oz. in Q3 2018, which was higher than
production during the quarter due to timing, but less than the 638,659 Au eq. oz. sold in Q3 2017 due to lower production.
Production cost of sales: Production cost of sales per Au eq. oz.2 was $777 for Q3
2018, compared with $662 for Q3 2017, mainly as a result of higher cost of sales per ounce sold at Fort Knox, Tasiast and
Kupol.
Production cost of sales per Au oz. on a by-product basis2 was $768 in Q3 2018, compared with $645 in
Q3 2017, based on Q3 2018 attributable gold sales of 605,244 ounces and attributable silver sales of 1,068,248 ounces.
All-in sustaining cost: All-in sustaining cost per Au eq. oz. sold2 was $1,049 in Q3
2018, compared with $937 in Q3 2017. All-in sustaining cost per Au oz. sold on a by-product basis2 was $1,046 in Q3
2018, compared with $927 in Q3 2017.
Revenue: Revenue from metal sales was $753.9 million in the third quarter of 2018, compared
with $828.0 million during the same period in 2017, due to a decrease in gold equivalent ounces sold and the average realized gold
price.
Average realized gold price4: The average realized gold price in Q3 2018 was $1,209
per ounce, compared with $1,283 per ounce in Q3 2017.
Margins: Kinross’ attributable margin was $432 per Au eq. oz. sold5 for Q3 2018,
compared with $621 per Au eq. oz. sold in Q3 2017.
Operating cash flow: Net operating cash flow was $127.2 million for the third quarter of 2018,
compared with $197.7 million for Q3 2017.
Adjusted operating cash flow2 was $143.2 million for Q3 2018, compared with $320.8 million for Q3
2017.
Earnings/loss: Reported net loss3 was $104.4 million, or $0.08 per share, for Q3
2018, compared with earnings of $60.1 million, or $0.05 per share, in Q3 2017. The decrease was mainly a result of lower margins
and an increase in income tax expense.
Adjusted net loss2,3 was $48.4 million, or $0.04 per share, for Q3 2018, compared with adjusted net
earnings of $84.1 million, or $0.07 per share, for Q3 2017.
Capital expenditures: Capital expenditures increased to $276.4 million for Q3 2018, compared
with $204.7 million for the same period last year, mainly due to increased spending at Round Mountain and Bald Mountain.
Operating results
Mine-by-mine summaries for 2018 third-quarter operating results may be found on pages eight and 12 of this news
release. Highlights include the following:
Americas
Round Mountain continued its consistent performance, with production in line and cost of sales
per ounce sold lower compared with the previous quarter mainly due to a decrease in operating waste mined and the timing of ounces
processed through the mill. Production was lower and cost of sales per ounce sold was higher year-over-year primarily due to lower
mill grade, as the mine achieved the highest mill grades since 2003 during Q3 2017. The site experienced a wall failure in the
southwest corner of the pit, which the Company does not expect to significantly impact production or the Phase W project.
At Bald Mountain, production was down year-over-year mainly due to fewer tonnes and lower grade
ore placed on the heap leach pads and was in line quarter-over-quarter. Gold sales were higher compared with the previous quarter
and year-over-year mainly due to timing of sales. Cost of sales per ounce sold decreased year-over-year as a result of less
operating waste mined and was higher quarter-over-quarter mainly due to an increase in operating waste mined.
At Fort Knox, production was lower year-over-year largely due to the impact of the pit wall
slide in Q1 2018 and higher than average amount of rainfall in the area which affected geotechnical stability during the quarter.
In addition, production was lower compared with the previous quarter mainly due to lower mill grades and fewer tonnes of ore
processed on the heap leach pads. Cost of sales per ounce sold was higher compared with the previous quarter and prior year
primarily due to the decline in mill grades and lower gold equivalent ounces sold. Additionally, cost of sales per ounce was higher
compared with Q3 2017 due to an increase in operating waste mined. Fort Knox production and costs are expected to be at similar
levels in Q4 2018.
Paracatu continued to perform well in Q3 2018, with increased production compared with the
second quarter due to timing of ounces processed through the mill and slightly higher grades and recoveries. Production was
significantly higher year-over-year as mining and processing activities were curtailed in Q3 2017 due to lower than average
rainfall in the region. Cost of sales per ounce sold was lower compared with the previous quarter and year-over-year due to lower
power costs as a result of the acquisition of the power plants in Q3 2018 and favourable foreign exchange movements.
At Maricunga, production decreased compared with the previous quarter and Q3 2017 as the
rinsing of ore placed on the heap leach pads prior to the suspension of mining activities ramped down. Cost of sales per ounce sold
increased quarter-over-quarter and year-over-year mainly due to timing of gold sales.
Russia
The region performed well in Q3 2018, as Kupol and Dvoinoye production
increased compared with the previous quarter mainly due to higher grades. Compared with Q3 2017, production decreased mainly due to
planned mining of lower grade ore. Cost of sales per ounce sold increased quarter-over-quarter mainly due to higher reagent costs,
and increased year-over-year mainly due to lower grades and high operating waste mined, partially offset by favourable foreign
exchange movements.
West Africa
At Tasiast, commissioning of the new SAG mill was completed during the quarter as the ramp-up
of throughput advanced well and was consistently at nameplate capacity by the end of the quarter. Production increased
quarter-over-quarter as the mill achieved higher throughput with the completion of Phase One commissioning. Production decreased
year-over-year mainly due to lower mill grades as a result of delays in the mine plan to access higher grade material. Cost of
sales per ounce sold increased quarter-over-quarter and year-over-year mainly due to higher fuel and maintenance costs. An increase
in operating waste mined and lower gold equivalent ounces sold also contributed to the higher year-over-year cost of sales. Tasiast
performance is expected to further improve in the fourth quarter, with the mine achieving record monthly production in October as
mining moved to higher grade areas of the pit.
Chirano continued to perform well, with production largely in line with Q2 2018 due to strong
mill performance. Production decreased year-over-year primarily due to anticipated lower grades. Cost of sales per ounce sold
was in line quarter-over-quarter and higher year-over-year due to fewer ounces sold, partially offset by lower labour, power and
maintenance costs. Exploration activities focused on potential incremental additions to mine life continue to show promising
results.
Organic development projects and opportunities
Tasiast expansion update
Kinross continues to analyze alternative approaches to incrementally expand throughput at the Tasiast mine after
pausing activities at the Phase Two project. The Company also continues to advance its discussions with the
Government of Mauritania regarding its activities in the country, including agreeing to a process with the Minister of Petroleum,
Energy and Mines to facilitate a resolution of the matter raised in the letter received from the Government in May 2018. The
Company’s evaluation of alternative throughput approaches, and a decision on the next steps for Phase Two, are subject to the
ongoing engagement with the Government.
Kinross has also advanced the approximately $300 million in project financing it is targeting for Tasiast.
During the third quarter, the Company signed a mandate letter with EDC, indicating their interest in the financing, subject to
further due diligence. This was in addition to a mandate letter signed with the IFC, a division of the World Bank, in Q2 2018.
Meetings with EDC, IFC and their technical advisors were conducted during the quarter, followed by a due diligence site visit in
early Q4 2018 that included meetings with relevant Mauritanian government Ministers and officials. Commercial banks continue to
express interest in the financing.
Round Mountain Phase W
The Round Mountain Phase W project is progressing on schedule and on budget, with pre-stripping
advancing well and initial Phase W ore expected to be encountered in mid-2019. Detailed engineering of all major infrastructure is
now complete and construction of the vertical carbon-in-column (VCIC) plant is proceeding well, with supporting concrete work
nearing completion. Construction of the new heap leach pad has commenced and is now 20% complete, with construction of project
infrastructure such as the truck shop, warehouse, wash bay and fueling area proceeding as planned.
Fort Knox Gilmore project
The Fort Knox Gilmore project is progressing on schedule and on budget, with initial production
expected in early 2020. Preparations for major construction of the new heap leach pad, which includes grading, is proceeding well.
Drilling and expansion of the dewatering system has begun to prepare for the expected start of stripping in mid-2019. Engineering
is now essentially complete.
Bald Mountain Vantage Complex
The Bald Mountain Vantage Complex project is proceeding well and is on schedule and on budget.
Stripping and stacking of economic but previously leached ore on the new heap leach pad have commenced. Commissioning of the heap
leach and processing facilities is expected to begin in Q1 2019, with ore from the Vantage Complex expected to be encountered by
year-end. Engineering is now complete and initial construction and concrete work has begun for the truck shop, wash bay and the
VCIC plant.
On October 2, 2018, KG Mining (Bald Mountain) Inc., a subsidiary of the Company, completed a transaction with
Barrick Gold to acquire the remaining 50% interest in the Bald Mountain Exploration Joint Venture that it did not already own for
consideration including $15.5 million in cash and a 1.25% net smelter royalty. The Company now owns 100% of the Bald Mountain
property, the largest private mining land package in the U.S.
Russia satellite deposits
The Moroshka project has been completed, as production commenced in October at the high-grade
satellite deposit located approximately four kilometres east of Kupol. At the Dvoinoye Zone 1 deposit, mine and
surface infrastructure is nearly complete and development is continuing as scheduled, with production expected to commence in
mid-2019.
Chile projects
The feasibility study for the La Coipa Restart project and the scoping study for the
Lobo Marte project both remain on schedule to be completed in the second half of 2019 and the first half of 2019
respectively. Permitting for the La Coipa Restart project has now been completed, as the Company received final sectoral permits
for the Phase 7 deposit in the third quarter. Engineering firms have been selected and have commenced work on the studies.
The Company is evaluating both projects for a return to long-term production in Chile and assessing the
potential to share resources and leverage synergies between the projects, which are located approximately 80 kilometres apart. The
La Coipa Restart feasibility study is contemplating refurbishments of the existing plant and infrastructure, and the processing of
high-grade materials from the Phase 7 deposit. The Lobo Marte scoping study is taking a refreshed look at the project and assessing
optimum processing scenarios for the potential for a production start at the end of La Coipa’s mine life.
Balance sheet and financial flexibility
As of September 30, 2018, Kinross had cash and cash equivalents of $470.1 million, compared with $1,025.8
million at December 31, 2017, mainly due to capital expenditures at the Company’s development projects across its portfolio and the
acquisition of two hydroelectric power plants in Brazil, partially offset by operating cash flow. The Company also had available
credit of $1,554.3 million, for total liquidity of approximately $2.0 billion, and has no debt maturities until 2021.
Outlook
The following section of the news release represents forward-looking information and users are cautioned
that actual results may vary. We refer to the risks and assumptions contained in the Cautionary Statement on Forward-Looking
Information on page 18 of this news release.
Kinross annual production guidance remains unchanged, as the Company expects to produce 2.5 million Au eq. oz.
(+/- 5%) for the year. The Company is also on track to meet its 2018 full-year production cost of sales guidance of $730 per Au eq.
oz. (+/- 5%) and all-in sustaining cost guidance of $975 (+/- 5%) per ounce sold on both a gold equivalent and by-product
basis.
The Company expects to meet its 2018 capital expenditure forecast of approximately $1,075 million (+/- 5%),
which includes sustaining capital of $355 million and non-sustaining capital of approximately $680 million.
Other operating costs are now expected to be approximately $130 million for 2018, compared with the previous
guidance of approximately $100 million, mainly as a result of tax related items at Tasiast and pit wall slide related costs at Fort
Knox.
Board Chair update
John Oliver, Kinross’ Independent Board Chair since 2002, has announced that he will retire from his role
as Board Chair effective December 31, 2018. Catherine McLeod-Seltzer, a Board member since 2005, has been appointed the new
Independent Chair of Kinross, effective January 1, 2019.
Mr. Oliver has made numerous significant contributions during his long and distinguished directorship at the
Company. He has overseen strategy as Kinross grew and expanded to be one of the leading gold mining companies in the world. During
his tenure, he also oversaw a number of key Board governance initiatives, including: a “refresh” of the Board; the development and
implementation of various governance policies, such as Board diversity; and a restructuring of Board committees. These initiatives
have addressed the evolving business needs of the Company to position it for future success in a more complex regulatory and
operating environment. Mr. Oliver was also chair of the Human Resources and Compensation Committee and oversaw executive
compensation and the development and successorship of senior management. Following a short transition period with the new
Chairperson, Mr. Oliver will not stand for re-election at the 2019 Annual Meeting of Shareholders.
Ms. McLeod-Seltzer has extensive and proven leadership experience in the mining industry, having been a founder,
Board member and Chief Executive Officer in numerous mineral companies. She is recognized for her financial expertise, ability to
create growth-focused companies, and has been an instrumental part of many corporate transactions and mining ventures. Ms.
McLeod-Seltzer was named “Mining Man of the Year” by The Northern Miner in 1999; given the “Award for Performance” by the
Association of Women in Finance in 1997; named on the Financial Post’s “Power 50”; has received the “Canada’s Most
Powerful Women Top 100 Award”; and was named one of “100 Global Inspirational Women in Mining” in 2013 and 2016 by Women In Mining
(UK).
“We are pleased that Catherine will take on the role of Independent Chair and look forward to her guidance and
stewardship as we continue to build on Kinross’ strong foundation and responsibly deliver on our strategy to create value for all
our stakeholders,” said J. Paul Rollinson, President and CEO. “On behalf of the Board and Kinross management, I would like to
extend a sincere thank you to John for his leadership and deep commitment to the Company. John has been an important part of
Kinross for more than 20 years and has overseen Kinross’ tremendous growth during his chairmanship.”
Conference call details
In connection with the release, Kinross will hold a conference call and audio webcast on Thursday, November 8,
2018 at 8:00 a.m. ET. to discuss the results, followed by a question-and-answer session. To access the call, please dial:
Canada & US toll-free – (877) 201-0168; Conference ID: 7793997
Outside of Canada & US – +1 (647) 788-4901; Conference ID: 7793997
Replay (available up to 14 days after the call):
Canada & US toll-free – (800) 585-8367; Conference ID: 7793997
Outside of Canada & US – +1 (416) 621-4642; Conference ID: 7793997
You may also access the conference call on a listen-only basis via webcast at our website www.kinross.com. The audio webcast will be archived on www.kinross.com.
This news release should be read in conjunction with Kinross’ 2018 third-quarter unaudited Financial Statements
and Management’s Discussion and Analysis report at www.kinross.com. Kinross’ 2018 third-quarter unaudited
Financial Statements and Management’s Discussion and Analysis have been filed with Canadian securities
regulators (available at www.sedar.com) and furnished to the U.S. Securities and Exchange Commission (available at www.sec.gov).
Kinross shareholders may obtain a copy of the financial statements free of charge upon request to the Company.
About Kinross Gold Corporation
Kinross is a Canadian-based senior gold mining company with mines and projects in the United States, Brazil, Russia, Mauritania,
Chile and Ghana. Kinross maintains listings on the Toronto Stock Exchange (symbol:K) and the New York Stock Exchange
(symbol:KGC).
Media Contact
Louie Diaz
Senior Director, Corporate Communications
phone: 416-369-6469
louie.diaz@kinross.com
Investor Relations Contact
Tom
Elliott
Senior Vice-President, Investor Relations and Corporate Development
phone:
416-365-3390
tom.elliott@kinross.com
Review of operations
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Gold equivalent
ounces |
|
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost of
sales ($millions) |
|
Production cost of sales/equivalent ounce sold |
|
2018 |
2017 |
|
2018 |
2017 |
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
51,984 |
101,047 |
|
52,197 |
101,077 |
|
$ |
53.0 |
$ |
64.8 |
|
$ |
1,015 |
$ |
641 |
Round Mountain |
94,153 |
120,743 |
|
96,496 |
120,944 |
|
69.0 |
75.7 |
|
715 |
626 |
Bald Mountain |
72,560 |
80,677 |
|
90,931 |
67,598 |
|
53.4 |
46.7 |
|
587 |
691 |
Kettle River - Buckhorn |
- |
17,132 |
|
- |
17,385 |
|
- |
10.3 |
|
- |
592 |
Paracatu |
126,515 |
46,971 |
|
125,700 |
53,076 |
|
97.6 |
53.0 |
|
776 |
999 |
Maricunga |
10,808 |
20,463 |
|
30,442 |
14,129 |
|
22.4 |
8.1 |
|
736 |
573 |
Americas Total |
356,020 |
387,033 |
|
395,766 |
374,209 |
|
295.4 |
258.6 |
|
746 |
691 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
125,870 |
145,759 |
|
123,624 |
142,821 |
|
81.3 |
74.8 |
|
658 |
524 |
Russia Total |
125,870 |
145,759 |
|
123,624 |
142,821 |
|
81.3 |
74.8 |
|
658 |
524 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
53,363 |
62,065 |
|
50,549 |
62,448 |
|
66.2 |
46.1 |
|
1,310 |
738 |
Chirano (100%) |
56,675 |
65,707 |
|
53,915 |
65,757 |
|
41.7 |
48.0 |
|
773 |
730 |
West Africa Total |
110,038 |
127,772 |
|
104,464 |
128,205 |
|
107.9 |
94.1 |
|
1,033 |
734 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
591,928 |
660,564 |
|
623,854 |
645,235 |
|
484.6 |
427.5 |
|
777 |
663 |
Less Chirano non-controlling
interest (10%) |
(5,668) |
(6,571) |
|
(5,391) |
(6,576) |
|
(4.1) |
(4.8) |
|
|
|
Attributable
Total |
586,260 |
653,993 |
|
618,463 |
638,659 |
|
$ |
480.5 |
$ |
422.7 |
|
$ |
777 |
$ |
662 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
Gold equivalent
ounces |
|
|
|
|
|
|
|
|
Produced |
|
Sold |
|
Production cost of
sales ($millions) |
|
Production cost of
sales/equivalent ounce sold |
|
2018 |
2017 |
|
2018 |
2017 |
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Fort Knox |
203,375 |
285,933 |
|
204,148 |
287,055 |
|
$ |
165.3 |
$ |
181.2 |
|
$ |
810 |
$ |
631 |
Round Mountain |
288,886 |
338,683 |
|
289,709 |
333,853 |
|
207.6 |
220.9 |
|
717 |
662 |
Bald Mountain |
237,435 |
177,635 |
|
249,803 |
163,553 |
|
127.2 |
121.9 |
|
509 |
745 |
Kettle River - Buckhorn |
- |
72,664 |
|
927 |
73,138 |
|
- |
36.4 |
|
- |
498 |
Paracatu |
375,941 |
293,936 |
|
371,022 |
293,408 |
|
313.9 |
250.4 |
|
846 |
853 |
Maricunga |
52,840 |
72,088 |
|
70,560 |
30,115 |
|
49.6 |
13.0 |
|
703 |
432 |
Americas Total |
1,158,477 |
1,240,939 |
|
1,186,169 |
1,181,122 |
|
863.6 |
823.8 |
|
728 |
697 |
|
|
|
|
|
|
|
|
|
|
|
|
Kupol |
366,469 |
435,150 |
|
370,427 |
435,489 |
|
219.5 |
227.1 |
|
593 |
521 |
Russia Total |
366,469 |
435,150 |
|
370,427 |
435,489 |
|
219.5 |
227.1 |
|
593 |
521 |
|
|
|
|
|
|
|
|
|
|
|
|
Tasiast |
159,417 |
182,966 |
|
159,461 |
181,263 |
|
167.8 |
135.2 |
|
1,052 |
746 |
Chirano (100%) |
175,426 |
179,742 |
|
175,754 |
189,239 |
|
133.2 |
156.8 |
|
758 |
829 |
West Africa Total |
334,843 |
362,708 |
|
335,215 |
370,502 |
|
301.0 |
292.0 |
|
898 |
788 |
|
|
|
|
|
|
|
|
|
|
|
|
Operations Total |
1,859,789 |
2,038,797 |
|
1,891,811 |
1,987,113 |
|
1,384.1 |
1,342.9 |
|
732 |
676 |
Less Chirano non-controlling
interest (10%) |
(17,543) |
(17,974) |
|
(17,575) |
(18,924) |
|
(13.3) |
(15.7) |
|
|
|
Attributable
Total |
1,842,246 |
2,020,823 |
|
1,874,236 |
1,968,189 |
|
$ |
1,370.8 |
$ |
1,327.2 |
|
$ |
731 |
$ |
674 |
Consolidated balance sheets
(unaudited expressed in millions of United States dollars,
except share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As at |
|
|
|
September 30, |
|
December 31, |
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
470.1 |
|
$ |
1,025.8 |
|
Restricted cash |
|
12.5 |
|
12.1 |
|
Accounts receivable and other
assets |
|
191.3 |
|
91.3 |
|
Current income tax
recoverable |
|
35.7 |
|
43.9 |
|
Inventories |
|
1,047.7 |
|
1,094.3 |
|
Unrealized fair value of
derivative assets |
|
17.3 |
|
17.0 |
|
|
|
1,774.6 |
|
2,284.4 |
|
Non-current assets |
|
|
|
|
|
Property, plant and
equipment |
|
5,385.5 |
|
4,887.2 |
|
Goodwill |
|
162.7 |
|
162.7 |
|
Long-term investments |
|
154.8 |
|
188.0 |
|
Investments in joint
ventures |
|
24.3 |
|
23.7 |
|
Unrealized fair value of
derivative assets |
|
8.4 |
|
3.9 |
|
Other long-term
assets |
|
628.9 |
|
574.0 |
|
Deferred tax assets |
|
30.0 |
|
33.3 |
|
Total assets |
|
$ |
8,169.2 |
|
$ |
8,157.2 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable and accrued
liabilities |
|
$ |
456.2 |
|
$ |
482.6 |
|
Current income tax payable |
|
27.3 |
|
35.1 |
|
Current portion of
provisions |
|
36.3 |
|
66.5 |
|
Current portion of unrealized
fair value of derivative liabilities |
|
28.0 |
|
1.1 |
|
Deferred payment obligation |
|
30.0 |
|
- |
|
|
|
577.8 |
|
585.3 |
|
Non-current liabilities |
|
|
|
|
|
Long-term debt |
|
1,734.4 |
|
1,732.6 |
|
Provisions |
|
849.0 |
|
830.5 |
|
Unrealized fair value of
derivative liabilities |
|
13.7 |
|
0.2 |
|
Other long-term
liabilities |
|
139.9 |
|
133.8 |
|
Deferred tax
liabilities |
|
277.0 |
|
255.6 |
|
Total liabilities |
|
3,591.8 |
|
3,538.0 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Common shareholders' equity |
|
|
|
|
|
Common share capital |
|
$ |
14,913.4 |
|
$ |
14,902.5 |
|
Contributed surplus |
|
236.4 |
|
240.7 |
|
Accumulated deficit |
|
(10,520.3) |
|
(10,580.7) |
|
Accumulated other comprehensive
income (loss) |
|
(73.6) |
|
21.1 |
|
Total common shareholders'
equity |
|
4,555.9 |
|
4,583.6 |
|
Non-controlling interest |
|
21.5 |
|
35.6 |
|
Total equity |
|
4,577.4 |
|
4,619.2 |
|
Total liabilities and
equity |
|
$ |
8,169.2 |
|
$ |
8,157.2 |
|
|
|
|
|
|
|
Common shares |
|
|
|
|
|
Authorized |
|
Unlimited |
|
Unlimited |
|
Issued and
outstanding |
|
1,250,228,821 |
|
1,247,003,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statements of operations
(unaudited expressed in millions of United
States dollars, except share and per share amounts) |
|
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
Metal sales |
|
$ |
753.9 |
|
$ |
828.0 |
|
$ |
2,426.1 |
|
$ |
2,492.7 |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
|
Production cost of
sales |
|
484.6 |
|
427.5 |
|
1,384.1 |
|
1,342.9 |
Depreciation, depletion and
amortization |
|
204.7 |
|
207.6 |
|
588.1 |
|
629.1 |
Total cost of sales |
|
689.3 |
|
635.1 |
|
1,972.2 |
|
1,972.0 |
Gross profit |
|
64.6 |
|
192.9 |
|
453.9 |
|
520.7 |
Other operating expense |
|
46.7 |
|
55.1 |
|
101.5 |
|
116.3 |
Exploration and business
development |
|
32.5 |
|
26.1 |
|
76.8 |
|
72.0 |
General and
administrative |
|
34.2 |
|
31.6 |
|
100.2 |
|
98.8 |
Operating earnings
(loss) |
|
(48.8) |
|
80.1 |
|
175.4 |
|
233.6 |
Other income (expense) -
net |
|
(2.6) |
|
(1.2) |
|
5.1 |
|
123.5 |
Equity in losses of joint
ventures and associate |
|
(0.2) |
|
(0.1) |
|
(0.4) |
|
(1.0) |
Finance income |
|
2.5 |
|
3.3 |
|
9.1 |
|
9.4 |
Finance expense |
|
(22.1) |
|
(32.3) |
|
(73.7) |
|
(89.3) |
Earnings (loss) before
tax |
|
(71.2) |
|
49.8 |
|
115.5 |
|
276.2 |
Income tax recovery
(expense) - net |
|
(34.1) |
|
10.3 |
|
(112.5) |
|
(50.6) |
Net earnings
(loss) |
|
$ |
(105.3) |
|
$ |
60.1 |
|
$ |
3.0 |
|
$ |
225.6 |
Net earnings (loss) attributable
to: |
|
|
|
|
|
|
|
|
Non-controlling interest |
|
$ |
(0.9) |
|
$ |
- |
|
$ |
(1.1) |
|
$ |
(2.2) |
Common shareholders |
|
$ |
(104.4) |
|
$ |
60.1 |
|
$ |
4.1 |
|
$ |
227.8 |
Earnings (loss) per share
attributable to common shareholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.08) |
|
$ |
0.05 |
|
$ |
0.00 |
|
$ |
0.18 |
Diluted |
|
$ |
(0.08) |
|
$ |
0.05 |
|
$ |
0.00 |
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
Weighted average number of common
shares outstanding
(millions) |
|
|
|
|
|
|
|
|
Basic |
|
1,250.2 |
|
1,247.0 |
|
1,249.2 |
|
1,246.5 |
Diluted |
|
1,250.2 |
|
1,257.1 |
|
1,258.7 |
|
1,256.5 |
Consolidated statements of cash flows
(unaudited expressed in millions of United States
dollars) |
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
September 30, |
|
September 30, |
|
September 30, |
|
September 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net inflow (outflow) of cash related to the
following activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating: |
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
(105.3) |
|
$ |
60.1 |
|
$ |
3.0 |
|
$ |
225.6 |
Adjustments to reconcile net earnings
(loss) to net cash provided from
operating activities: |
|
|
|
|
|
|
|
Depreciation, depletion and
amortization |
204.7 |
|
207.6 |
|
588.1 |
|
629.1 |
Gain on disposition of
associate and other interests - net |
- |
|
- |
|
- |
|
(11.0) |
Reversal of impairment
charges |
- |
|
- |
|
- |
|
(97.0) |
Equity in losses of joint
ventures and associate |
0.2 |
|
0.1 |
|
0.4 |
|
1.0 |
Share-based compensation
expense |
3.7 |
|
3.5 |
|
11.2 |
|
10.1 |
Finance expense |
22.1 |
|
32.3 |
|
73.7 |
|
89.3 |
Deferred tax expense
(recovery) |
7.8 |
|
3.7 |
|
35.1 |
|
(13.5) |
Foreign exchange losses
(gains) and other |
10.0 |
|
1.6 |
|
26.9 |
|
(45.0) |
Reclamation expense |
- |
|
11.9 |
|
- |
|
13.9 |
Changes in operating assets
and liabilities: |
|
|
|
|
|
|
|
Accounts receivable and
other assets |
(74.0) |
|
(76.5) |
|
(118.1) |
|
(33.4) |
Inventories |
15.9 |
|
(60.7) |
|
14.1 |
|
(65.8) |
Accounts payable and accrued
liabilities |
65.0 |
|
46.1 |
|
49.0 |
|
28.3 |
Cash flow provided from operating
activities |
150.1 |
|
229.7 |
|
683.4 |
|
731.6 |
Income taxes paid |
(22.9) |
|
(32.0) |
|
(78.2) |
|
(146.4) |
Net cash flow provided from operating
activities |
127.2 |
|
197.7 |
|
605.2 |
|
585.2 |
|
|
|
|
|
|
|
|
Investing: |
|
|
|
|
|
|
|
Additions to property, plant
and equipment |
(276.4) |
|
(204.7) |
|
(770.4) |
|
(584.3) |
Acquisition |
(253.7) |
|
- |
|
(288.8) |
|
- |
Net additions to long-term
investments and other assets |
(6.0) |
|
(32.9) |
|
(36.2) |
|
(48.0) |
Net proceeds from the sale
of property, plant and equipment |
0.8 |
|
1.5 |
|
4.8 |
|
6.3 |
Net proceeds from
disposition of associate and other interests |
- |
|
- |
|
- |
|
267.5 |
Decrease (increase) in
restricted cash |
(0.3) |
|
0.4 |
|
(0.4) |
|
(0.7) |
Interest received and
other |
1.5 |
|
1.9 |
|
6.5 |
|
5.2 |
Net cash flow used in investing
activities |
(534.1) |
|
(233.8) |
|
(1,084.5) |
|
(354.0) |
Financing: |
|
|
|
|
|
|
|
Issuance of common shares on
exercise of options |
- |
|
- |
|
0.5 |
|
0.8 |
Proceeds from issuance of
debt |
80.0 |
|
494.7 |
|
80.0 |
|
494.7 |
Repayment of debt |
(80.0) |
|
(500.0) |
|
(80.0) |
|
(500.0) |
Interest paid |
(27.8) |
|
(28.4) |
|
(57.8) |
|
(62.9) |
Dividend paid to
non-controlling interest |
(13.0) |
|
- |
|
(13.0) |
|
- |
Other |
(1.8) |
|
(1.1) |
|
(1.9) |
|
(1.6) |
Net cash flow used in financing
activities |
(42.6) |
|
(34.8) |
|
(72.2) |
|
(69.0) |
Effect of exchange rate changes on cash and cash
equivalents |
0.9 |
|
1.7 |
|
(4.2) |
|
2.9 |
Increase (decrease) in cash and cash
equivalents |
(448.6) |
|
(69.2) |
|
(555.7) |
|
165.1 |
Cash and cash equivalents, beginning of
period |
918.7 |
|
1,061.3 |
|
1,025.8 |
|
827.0 |
Cash and cash equivalents, end of
period |
$ |
470.1 |
|
$ |
992.1 |
|
$ |
470.1 |
|
$ |
992.1 |
|
|
|
|
|
|
|
|
|
Mine |
Period |
Ownership |
Tonnes
Ore Mined (1) |
Ore
Processed (Milled) (1) |
Ore
Processed (Heap Leach) (1) |
Grade (Mill) |
Grade (Heap Leach) |
Recovery (2) |
Gold Eq Production (5) |
Gold Eq Sales (5) |
Production cost of sales |
Production cost of sales/oz |
Cap Ex (7) |
DD&A |
|
|
|
(%) |
('000 tonnes) |
('000 tonnes) |
('000 tonnes) |
(g/t) |
(g/t) |
(%) |
(ounces) |
(ounces) |
($ millions) |
($/ounce) |
($ millions) |
($ millions) |
Americas |
Fort Knox |
Q3 2018 |
100 |
5,306 |
2,718 |
3,262 |
0.42 |
0.19 |
81% |
51,984 |
52,197 |
$ 53.0 |
$ 1,015 |
$ 32.6 |
$ 26.0 |
Q2 2018 |
100 |
4,620 |
3,106 |
4,279 |
0.44 |
0.18 |
80% |
71,463 |
72,340 |
70.1 |
$ 969 |
16.8 |
38.8 |
Q1 2018 |
100 |
9,075 |
3,110 |
5,839 |
0.70 |
0.20 |
82% |
79,928 |
79,611 |
42.2 |
$ 530 |
9.6 |
23.0 |
Q4 2017 |
100 |
8,276 |
3,239 |
4,464 |
0.96 |
0.23 |
82% |
95,182 |
94,724 |
58.7 |
$ 620 |
27.3 |
23.6 |
Q3 2017 |
100 |
7,490 |
3,228 |
6,088 |
0.78 |
0.26 |
81% |
101,047 |
101,077 |
64.8 |
$
641 |
25.4 |
20.5 |
Round Mountain |
Q3
2018 |
100 |
5,023 |
980 |
4,410 |
1.43 |
0.42 |
82% |
94,153 |
96,496 |
$ 69.0 |
$ 715 |
$ 47.1 |
$ 12.7 |
Q2 2018 |
100 |
4,721 |
853 |
4,361 |
1.44 |
0.37 |
86% |
97,650 |
95,432 |
72.0 |
$ 754 |
43.6 |
13.9 |
Q1 2018 |
100 |
7,893 |
832 |
8,175 |
1.62 |
0.28 |
86% |
97,083 |
97,781 |
66.6 |
$ 681 |
26.4 |
14.8 |
Q4 2017 |
100 |
5,429 |
864 |
4,201 |
1.46 |
0.46 |
84% |
98,249 |
104,198 |
81.6 |
$ 783 |
66.2 |
15.3 |
Q3 2017 |
100 |
6,906 |
865 |
5,177 |
1.73 |
0.50 |
81% |
120,743 |
120,944 |
75.7 |
$
626 |
14.7 |
34.9 |
Bald Mountain (8) |
Q3
2018 |
100 |
7,106 |
- |
5,806 |
- |
0.38 |
nm |
72,560 |
90,931 |
$ 53.4 |
$ 587 |
$ 44.2 |
$ 29.3 |
Q2 2018 |
100 |
7,109 |
- |
7,109 |
- |
0.48 |
nm |
71,435 |
60,730 |
27.7 |
$ 456 |
44.9 |
20.8 |
Q1 2018 |
100 |
5,333 |
- |
5,333 |
- |
0.38 |
nm |
93,440 |
98,142 |
46.1 |
$ 470 |
20.4 |
27.2 |
Q4 2017 |
100 |
5,691 |
- |
5,691 |
- |
0.72 |
nm |
105,080 |
99,363 |
47.0 |
$ 473 |
46.6 |
28.6 |
Q3 2017 |
100 |
7,090 |
- |
7,105 |
- |
1.09 |
nm |
80,677 |
67,598 |
46.7 |
$
691 |
12.6 |
24.6 |
Kettle River- Buckhorn |
Q3
2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
$ - |
$ - |
$ - |
$ - |
Q2 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
- |
- |
$ - |
- |
- |
Q1 2018 |
100 |
- |
- |
- |
- |
- |
0% |
- |
927 |
- |
$ - |
- |
- |
Q4 2017 |
100 |
- |
- |
- |
- |
- |
0% |
3,906 |
3,949 |
0.4 |
$ 101 |
- |
- |
Q3 2017 |
100 |
- |
43 |
- |
4.36 |
- |
67% |
17,132 |
17,385 |
10.3 |
$
592 |
- |
0.1 |
Paracatu |
Q3
2018 |
100 |
12,565 |
13,547 |
- |
0.38 |
- |
76% |
126,515 |
125,700 |
$ 97.6 |
$ 776 |
$ 25.1 |
$ 42.2 |
Q2 2018 |
100 |
11,677 |
14,074 |
- |
0.37 |
- |
75% |
121,226 |
117,043 |
100.4 |
$ 858 |
23.7 |
30.8 |
Q1 2018 |
100 |
11,988 |
13,041 |
- |
0.36 |
- |
77% |
128,200 |
128,279 |
115.9 |
$ 903 |
15.5 |
34.2 |
Q4 2017 |
100 |
6,895 |
8,331 |
- |
0.40 |
- |
75% |
66,023 |
62,843 |
59.8 |
$ 952 |
32.5 |
26.2 |
Q3 2017 |
100 |
227 |
4,067 |
- |
0.42 |
- |
69% |
46,971 |
53,076 |
53.0 |
$
999 |
32.6 |
30.6 |
Maricunga (8) |
Q3 2018 |
100 |
- |
- |
- |
- |
- |
nm |
10,808 |
30,442 |
$ 22.4 |
$ 736 |
$ - |
$ 1.1 |
Q2 2018 |
100 |
- |
- |
- |
- |
- |
nm |
19,866 |
17,764 |
11.7 |
$ 659 |
- |
0.8 |
Q1 2018 |
100 |
- |
- |
- |
- |
- |
nm |
22,166 |
22,354 |
15.5 |
$ 693 |
- |
1.5 |
Q4 2017 |
100 |
- |
- |
- |
- |
- |
nm |
19,039 |
11,201 |
6.9 |
$ 616 |
1.3 |
1.1 |
Q3 2017 |
100 |
- |
- |
- |
- |
- |
nm |
20,463 |
14,129 |
8.1 |
$
573 |
- |
1.7 |
Russia |
Kupol (3)(4)(6) |
Q3
2018 |
100 |
412 |
439 |
- |
8.69 |
- |
95% |
125,870 |
123,624 |
$ 81.3 |
$ 658 |
$ 22.0 |
$ 32.0 |
Q2 2018 |
100 |
412 |
430 |
- |
8.42 |
- |
95% |
120,418 |
124,179 |
73.6 |
$ 593 |
11.2 |
33.0 |
Q1 2018 |
100 |
412 |
427 |
- |
8.58 |
- |
95% |
120,181 |
122,624 |
64.6 |
$ 527 |
10.8 |
38.4 |
Q4 2017 |
100 |
487 |
425 |
- |
10.38 |
- |
95% |
145,301 |
141,518 |
73.8 |
$ 521 |
19.1 |
43.3 |
Q3 2017 |
100 |
491 |
451 |
- |
9.69 |
- |
95% |
145,759 |
142,821 |
74.8 |
$
524 |
14.4 |
41.4 |
West Africa |
Tasiast |
Q3
2018 |
100 |
2,187 |
947 |
924 |
1.72 |
0.42 |
91% |
53,363 |
50,549 |
$ 66.2 |
$ 1,310 |
$ 98.1 |
$ 29.1 |
Q2 2018 |
100 |
966 |
750 |
755 |
1.88 |
0.29 |
91% |
47,276 |
48,409 |
54.8 |
$ 1,132 |
101.4 |
18.9 |
Q1 2018 |
100 |
1,786 |
736 |
279 |
2.26 |
0.36 |
93% |
58,778 |
60,503 |
46.8 |
$ 774 |
157.8 |
19.0 |
Q4 2017 |
100 |
2,534 |
807 |
318 |
2.28 |
0.69 |
92% |
60,274 |
54,993 |
43.0 |
$ 782 |
119.3 |
17.8 |
Q3 2017 |
100 |
2,139 |
764 |
576 |
2.42 |
0.67 |
93% |
62,065 |
62,448 |
46.1 |
$
738 |
93.8 |
16.7 |
Chirano - 100% |
Q3 2018 |
90 |
505 |
908 |
- |
2.10 |
- |
92% |
56,675 |
53,915 |
$ 41.7 |
$ 773 |
$ 6.9 |
$ 30.8 |
Q2 2018 |
90 |
458 |
873 |
- |
2.23 |
- |
92% |
58,572 |
57,399 |
44.6 |
$ 777 |
5.0 |
31.4 |
Q1 2018 |
90 |
523 |
885 |
- |
2.34 |
- |
92% |
60,179 |
64,440 |
46.9 |
$ 728 |
6.4 |
33.3 |
Q4 2017 |
90 |
496 |
878 |
- |
2.52 |
- |
92% |
66,285 |
61,973 |
43.3 |
$ 699 |
10.9 |
32.5 |
Q3
2017 |
90 |
456 |
886 |
- |
2.51 |
- |
92% |
65,707 |
65,757 |
48.0 |
$
730 |
7.7 |
34.8 |
Chirano - 90% |
Q3 2018 |
90 |
505 |
908 |
- |
2.10 |
- |
92% |
51,007 |
48,524 |
$ 37.6 |
$ 775 |
$ 6.2 |
$ 27.7 |
Q2 2018 |
90 |
458 |
873 |
- |
2.23 |
- |
92% |
52,715 |
51,659 |
40.1 |
$ 776 |
4.5 |
28.3 |
Q1 2018 |
90 |
523 |
885 |
- |
2.34 |
- |
92% |
54,161 |
57,996 |
42.2 |
$ 728 |
5.8 |
30.0 |
Q4 2017 |
90 |
496 |
878 |
- |
2.52 |
- |
92% |
59,656 |
55,776 |
39.0 |
$ 699 |
9.8 |
29.3 |
Q3
2017 |
90 |
456 |
886 |
- |
2.51 |
- |
92% |
59,136 |
59,181 |
43.2 |
$
730 |
6.9 |
31.3 |
(1) Tonnes of ore mined and processed represent 100% Kinross for all periods presented.
(2) Due to the nature of heap leach operations, recovery rates at Maricunga and Bald Mountain cannot
be accurately measured on a quarterly basis. Recovery rates at Fort Knox, Round Mountain and Tasiast represent mill recovery
only.
(3) The Kupol segment includes the Kupol and Dvoinoye mines.
(4) Kupol silver grade and recovery were as follows: Q3 2018: 72.38 g/t, 85.5%; Q2 2018: 68.65 g/t,
84%; Q1 2018: 69.35 g/t, 81.0%; Q4 2017: 81.85 g/t, 82.8%; Q3 2017: 81.50 g/t, 85.8%.
(5) Gold equivalent ounces include silver ounces produced and sold converted to a gold equivalent
based on the ratio of the average spot market prices for the commodities for each period. The ratios for the quarters presented are
as follows: Q3 2018: 80.80:1; Q2 2018: 79.00:1; Q1 2018: 79.25:1; Q4 2017: 76.22:1; Q3 2017: 75.91:1.
(6) Dvoinoye ore processed and grade were as follows: Q3 2018: 106,918, 10.03 g/t; Q2 2018: 121,739,
9.22 g/t; Q1 2018: 103,369, 10.13 g/t; Q4 2017: 127,671 tonnes, 13.44 g/t; Q3 2017: 111,330 tonnes, 15.37 g/t.
(7) Capital expenditures are presented on a cash basis, consistent with the statement of cash
flows.
(8) "nm" means not meaningful.
Reconciliation of non-GAAP financial measures
The Company has included certain non-GAAP financial measures in this document. These measures are not defined
under IFRS and should not be considered in isolation. The Company believes that these measures, together with measures determined
in accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. The
inclusion of these measures is meant to provide additional information and should not be used as a substitute for performance
measures prepared in accordance with IFRS. These measures are not necessarily standard and therefore may not be comparable to other
issuers.
Adjusted net earnings attributable to common shareholders and adjusted net earnings per share are non-GAAP
measures which determine the performance of the Company, excluding certain impacts which the Company believes are not reflective of
the Company’s underlying performance for the reporting period, such as the impact of foreign exchange gains and losses,
reassessment of prior year taxes and/or taxes otherwise not related to the current period, impairment charges (reversals), gains
and losses and other one-time costs related to acquisitions, dispositions and other transactions, and non-hedge derivative gains
and losses. Although some of the items are recurring, the Company believes that they are not reflective of the underlying operating
performance of its current business and are not necessarily indicative of future operating results. Management believes that these
measures, which are used internally to assess performance and in planning and forecasting future operating results, provide
investors with the ability to better evaluate underlying performance, particularly since the excluded items are typically not
included in public guidance. However, adjusted net earnings and adjusted net earnings per share measures are not necessarily
indicative of net earnings and earnings per share measures as determined under IFRS.
The following table provides a reconciliation of net earnings (loss) to adjusted net earnings (loss) for the
periods presented:
|
|
|
|
|
|
|
|
|
Adjusted Net Earnings (loss) |
(in millions, except per share
amounts) |
Three months ended |
|
Nine months ended |
|
|
September
30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Net earnings (loss)
attributable to common shareholders - as reported |
$ |
(104.4) |
$ |
60.1 |
|
$ |
4.1 |
$ |
227.8 |
Adjusting items: |
|
|
|
|
|
|
Foreign exchange (gains) losses |
2.7 |
2.7 |
|
(1.2) |
5.1 |
|
Gain (loss) on disposition of associate and interests and other assets -
net |
0.8 |
(0.2) |
|
0.9 |
(9.8) |
|
Foreign exchange losses (gains) on translation of tax basis and foreign
exchange on deferred income taxes within income tax expense |
25.4 |
(12.1) |
|
53.7 |
(10.9) |
|
Brazil power plant acquisition related costs |
3.4 |
- |
|
3.4 |
- |
|
Impairment reversal(a) |
- |
- |
|
- |
(97.0) |
|
Taxes in respect of prior periods |
3.6 |
9.9 |
|
23.6 |
39.0 |
|
Mine curtailment and suspension related costs |
- |
15.1 |
|
- |
15.1 |
|
Reclamation and remediation expense |
- |
11.9 |
|
4.5 |
11.9 |
|
Tasiast Phase One commissioning costs |
- |
- |
|
6.4 |
- |
|
Fort Knox pit wall slide related costs |
21.4 |
- |
|
21.4 |
- |
|
Chile weather event related costs |
- |
1.7 |
|
- |
3.3 |
|
Insurance recoveries |
- |
- |
|
- |
(17.5) |
|
Other(b) |
- |
- |
|
0.9 |
1.2 |
|
Tax effect of the above adjustments |
(1.3) |
(5.0) |
|
(3.1) |
(5.8) |
|
|
56.0 |
24.0 |
|
110.5 |
(65.4) |
Adjusted net earnings (loss)
attributable to common shareholders |
$ |
(48.4) |
$ |
84.1 |
|
$ |
114.6 |
$ |
162.4 |
Weighted average number of
common shares outstanding - Basic |
1,250.2 |
1,247.0 |
|
1,249.2 |
1,246.5 |
Adjusted net earnings (loss)
per share |
$ |
(0.04) |
$ |
0.07 |
|
$ |
0.09 |
$ |
0.13 |
|
|
|
|
|
|
|
- During the nine months ended September 30, 2017, the Company recognized a reversal of impairment charges related to the
disposal of its 25% interest in Cerro Casale.
- “Other” includes non-hedge derivatives losses (gains).
The Company makes reference to a non-GAAP measure for adjusted operating cash flow. Adjusted operating cash flow
is defined as cash flow from operations excluding certain impacts which the Company believes are not reflective of the Company’s
regular operating cash flow, and excluding changes in working capital. Working capital can be volatile due to numerous factors,
including the timing of tax payments, and in the case of Kupol, a build-up of inventory due to transportation logistics. The
Company uses adjusted operating cash flow internally as a measure of the underlying operating cash flow performance and future
operating cash flow-generating capability of the Company. However, the adjusted operating cash flow measure is not necessarily
indicative of net cash flow from operations as determined under IFRS.
The following table provides a reconciliation of adjusted operating cash flow for the periods presented:
|
|
Adjusted Operating Cash Flow |
(in millions) |
Three months ended |
|
Nine months ended |
|
|
September
30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Net cash flow provided from
operating activities - as reported |
$ |
127.2 |
$ |
197.7 |
|
$ |
605.2 |
$ |
585.2 |
|
|
|
|
|
|
|
Adjusting items: |
|
|
|
|
|
|
Working capital changes: |
|
|
|
|
|
|
Accounts receivable and other assets |
74.0 |
76.5 |
|
118.1 |
33.4 |
|
Inventories |
(15.9) |
60.7 |
|
(14.1) |
65.8 |
|
Accounts payable and other liabilities, including
taxes |
(42.1) |
(14.1) |
|
29.2 |
118.1 |
|
|
16.0 |
123.1 |
|
133.2 |
217.3 |
Adjusted operating cash flow |
$ |
143.2 |
$ |
320.8 |
|
$ |
738.4 |
$ |
802.5 |
|
|
|
|
|
|
|
Consolidated production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as production cost of
sales as per the consolidated financial statements divided by the total number of gold equivalent ounces sold. This measure
converts the Company’s non-gold production into gold equivalent ounces and credits it to total production.
Attributable production cost of sales per gold equivalent ounce sold is a non-GAAP measure and is defined as
attributable production cost of sales divided by the attributable number of gold equivalent ounces sold. This measure converts the
Company’s non-gold production into gold equivalent ounces and credits it to total production.
Management uses these measures to monitor and evaluate the performance of its operating properties. The
following table presents a reconciliation of consolidated and attributable production cost of sales per equivalent ounce sold for
the periods presented:
|
|
Consolidated and Attributable Production Cost of Sales
Per Equivalent Ounce Sold |
(in millions, except
ounces and production cost of sales per equivalent ounce) |
Three months
ended |
|
Nine months ended |
|
|
September
30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
484.6 |
$ |
427.5 |
|
$ |
1,384.1 |
$ |
1,342.9 |
Less: portion attributable to Chirano
non-controlling interest |
(4.1) |
(4.8) |
|
(13.3) |
(15.7) |
Attributable production cost of sales |
$ |
480.5 |
$ |
422.7 |
|
$ |
1,370.8 |
$ |
1,327.2 |
|
|
|
|
|
|
|
Gold equivalent ounces sold |
623,854 |
645,235 |
|
1,891,811 |
1,987,113 |
Less: portion attributable to Chirano
non-controlling interest |
(5,391) |
(6,576) |
|
(17,575) |
(18,924) |
Attributable gold equivalent ounces sold |
618,463 |
638,659 |
|
1,874,236 |
1,968,189 |
Consolidated production cost
of sales per equivalent ounce sold |
$ |
777 |
$ |
663 |
|
$ |
732 |
$ |
676 |
Attributable production cost
of sales per equivalent ounce sold |
$ |
777 |
$ |
662 |
|
$ |
731 |
$ |
674 |
|
|
|
|
|
|
|
|
Attributable production cost of sales per ounce sold on a by-product basis is a non-GAAP measure which
calculates the Company’s non-gold production as a credit against its per ounce production costs, rather than converting its
non-gold production into gold equivalent ounces and crediting it to total production, as is the case in co-product accounting.
Management believes that this measure provides investors with the ability to better evaluate Kinross’ production cost of sales per
ounce on a comparable basis with other major gold producers who routinely calculate their cost of sales per ounce using by-product
accounting rather than co-product accounting.
The following table provides a reconciliation of attributable production cost of sales per ounce sold on a
by-product basis for the periods presented:
|
|
|
|
|
|
|
|
|
Attributable Production Cost of Sales Per Ounce Sold
on a By-Product Basis |
(in millions, except ounces
and production cost of sales per ounce) |
Three months
ended |
|
Nine months ended |
|
|
September
30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as reported |
$ |
484.6 |
$ |
427.5 |
|
$ |
1,384.1 |
$ |
1,342.9 |
Less: portion attributable to Chirano
non-controlling interest |
(4.1) |
(4.8) |
|
(13.3) |
(15.7) |
Less: attributable silver revenues |
(15.7) |
(21.8) |
|
(51.2) |
(67.0) |
Attributable production cost
of sales net of silver by-product revenue |
$ |
464.8 |
$ |
400.9 |
|
$ |
1,319.6 |
$ |
1,260.2 |
|
|
|
|
|
|
|
Gold ounces sold |
610,630 |
628,280 |
|
1,851,687 |
1,933,711 |
Less: portion attributable to Chirano
non-controlling interest |
(5,386) |
(6,560) |
|
(17,548) |
(18,884) |
Attributable gold ounces sold |
605,244 |
621,720 |
|
1,834,139 |
1,914,827 |
Attributable production cost
of sales per ounce sold on a by-product basis |
$ |
768 |
$ |
645 |
|
$ |
719 |
$ |
658 |
|
|
|
|
|
|
|
In June 2013, the World Gold Council (“WGC”) published its guidelines for reporting all-in sustaining costs and
all-in costs. The WGC is a market development organization for the gold industry and is an association whose membership
comprises leading gold mining companies including Kinross. Although the WGC is not a mining industry regulatory organization,
it worked closely with its member companies to develop these non-GAAP measures. Adoption of the all-in sustaining cost and
all-in cost metrics is voluntary and not necessarily standard, and therefore, these measures presented by the Company may not be
comparable to similar measures presented by other issuers. The Company believes that the all-in sustaining cost and all-in
cost measures complement existing measures reported by Kinross.
All-in sustaining cost includes both operating and capital costs required to sustain gold production on an
ongoing basis. The value of silver sold is deducted from the total production cost of sales as it is considered residual
production. Sustaining operating costs represent expenditures incurred at current operations that are considered necessary to
maintain current production. Sustaining capital represents capital expenditures at existing operations comprising mine
development costs and ongoing replacement of mine equipment and other capital facilities, and does not include capital expenditures
for major growth projects or enhancement capital for significant infrastructure improvements at existing operations.
All-in cost is comprised of all-in sustaining cost as well as operating expenditures incurred at locations with
no current operation, or costs related to other non-sustaining activities, and capital expenditures for major growth projects or
enhancement capital for significant infrastructure improvements at existing operations.
Attributable all-in sustaining cost and all-in cost per ounce sold on a by-product basis are calculated by
adjusting total production cost of sales, as reported on the consolidated statement of operations, as follows:
|
|
Attributable All-In Sustaining Cost and All-In Cost Per Ounce Sold
on a By-Product Basis |
|
|
(in millions, except ounces and costs per
ounce) |
Three months ended |
|
Nine months
ended |
|
|
September
30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as
reported |
$ |
484.6 |
$ |
427.5 |
|
$ |
1,384.1 |
$ |
1,342.9 |
Less: portion attributable to
Chirano non-controlling interest(1) |
(4.1) |
(4.8) |
|
(13.3) |
(15.7) |
Less:
attributable(2) silver revenues(3) |
(15.7) |
(21.8) |
|
(51.2) |
(67.0) |
Attributable(2)
production cost of sales net of silver by-product revenue |
$ |
464.8 |
$ |
400.9 |
|
$ |
1,319.6 |
$ |
1,260.2 |
Adjusting items on an
attributable(2) basis: |
|
|
|
|
|
|
General and administrative(4) |
34.2 |
31.6 |
|
100.2 |
98.8 |
|
Other operating expense - sustaining(5) |
10.0 |
15.6 |
|
26.4 |
35.7 |
|
Reclamation and remediation - sustaining(6) |
11.8 |
23.7 |
|
40.6 |
65.9 |
|
Exploration and business development - sustaining(7) |
15.0 |
13.6 |
|
40.9 |
38.5 |
|
Additions to property, plant and equipment - sustaining(8) |
97.1 |
91.2 |
|
232.8 |
270.3 |
All-in Sustaining Cost on a
by-product basis - attributable(2) |
$ |
632.9 |
$ |
576.6 |
|
$ |
1,760.5 |
$ |
1,769.4 |
|
Other operating expense - non-sustaining(5) |
11.8 |
24.7 |
|
33.4 |
44.2 |
|
Reclamation and remediation - non-sustaining(6) |
2.9 |
1.5 |
|
5.6 |
4.6 |
|
Exploration - non-sustaining(7) |
17.3 |
12.3 |
|
35.5 |
33.0 |
|
Additions to property, plant and equipment - non-sustaining(8) |
158.2 |
102.7 |
|
495.0 |
288.4 |
All-in Cost on a by-product
basis - attributable(2) |
$ |
823.1 |
$ |
717.8 |
|
$ |
2,330.0 |
$ |
2,139.6 |
Gold ounces sold |
610,630 |
628,280 |
|
1,851,687 |
1,933,711 |
Less: portion attributable to Chirano
non-controlling interest(9) |
(5,386) |
(6,560) |
|
(17,548) |
(18,884) |
Attributable(2)
gold ounces sold |
605,244 |
621,720 |
|
1,834,139 |
1,914,827 |
Attributable(2)
all-in sustaining cost per ounce sold on a by-product basis |
$ |
1,046 |
$ |
927 |
|
$ |
960 |
$ |
924 |
Attributable(2)
all-in cost per ounce sold on a by-product basis |
$ |
1,360 |
$ |
1,155 |
|
$ |
1,270 |
$ |
1,117 |
|
|
|
|
|
|
|
The Company also assesses its all-in sustaining cost and all-in cost on a gold equivalent ounce basis. Under
these non-GAAP measures, the Company’s production of silver is converted into gold equivalent ounces and credited to total
production.
Attributable all-in sustaining cost and all-in cost per equivalent ounce sold are calculated by adjusting total
production cost of sales, as reported on the consolidated statement of operations, as follows:
(in millions, except ounces and costs per
equivalent ounce) |
Three months ended |
|
Nine months
ended |
|
|
September
30, |
|
September 30, |
|
|
2018 |
2017 |
|
2018 |
2017 |
|
|
|
|
|
|
|
Production cost of sales - as
reported |
$ |
484.6 |
$ |
427.5 |
|
$ |
1,384.1 |
$ |
1,342.9 |
Less: portion attributable to
Chirano non-controlling interest(1) |
(4.1) |
(4.8) |
|
(13.3) |
(15.7) |
Attributable(2)
production cost of sales |
$ |
480.5 |
$ |
422.7 |
|
$ |
1,370.8 |
$ |
1,327.2 |
Adjusting items on an
attributable(2) basis: |
|
|
|
|
|
|
General and administrative(4) |
34.2 |
31.6 |
|
100.2 |
98.8 |
|
Other operating expense - sustaining(5) |
10.0 |
15.6 |
|
26.4 |
35.7 |
|
Reclamation and remediation - sustaining(6) |
11.8 |
23.7 |
|
40.6 |
65.9 |
|
Exploration and business development - sustaining(7) |
15.0 |
13.6 |
|
40.9 |
38.5 |
|
Additions to property, plant and equipment - sustaining(8) |
97.1 |
91.2 |
|
232.8 |
270.3 |
All-in Sustaining Cost -
attributable(2) |
$ |
648.6 |
$ |
598.4 |
|
$ |
1,811.7 |
$ |
1,836.4 |
|
Other operating expense - non-sustaining(5) |
11.8 |
24.7 |
|
33.4 |
44.2 |
|
Reclamation and remediation - non-sustaining(6) |
2.9 |
1.5 |
|
5.6 |
4.6 |
|
Exploration - non-sustaining(7) |
17.3 |
12.3 |
|
35.5 |
33.0 |
|
Additions to property, plant and equipment - non-sustaining(8) |
158.2 |
102.7 |
|
495.0 |
288.4 |
All-in Cost -
attributable(2) |
$ |
838.8 |
$ |
739.6 |
|
$ |
2,381.2 |
$ |
2,206.6 |
Gold equivalent ounces
sold |
623,854 |
645,235 |
|
1,891,811 |
1,987,113 |
Less: portion attributable to
Chirano non-controlling interest(9) |
(5,391) |
(6,576) |
|
(17,575) |
(18,924) |
Attributable(2)
gold equivalent ounces sold |
618,463 |
638,659 |
|
1,874,236 |
1,968,189 |
Attributable(2)
all-in sustaining cost per equivalent ounce sold |
$ |
1,049 |
$ |
937 |
|
$ |
967 |
$ |
933 |
Attributable(2)
all-in cost per equivalent ounce sold |
$ |
1,356 |
$ |
1,158 |
|
$ |
1,270 |
$ |
1,121 |
|
|
|
|
|
|
|
- The portion attributable to Chirano non-controlling interest represents the non-controlling interest (10%) in the
production cost of sales for the Chirano mine.
- “Attributable” includes Kinross' share of Chirano (90%) production.
- “Attributable silver revenues” represents the attributable portion of metal sales realized from the production of the
secondary or by-product metal (i.e. silver). Revenue from the sale of silver, which is produced as a by-product of the process
used to produce gold, effectively reduces the cost of gold production.
- “General and administrative” expenses is as reported on the consolidated statement of operations. General and
administrative expenses are considered sustaining costs as they are required to be absorbed on a continuing basis for the
effective operation and governance of the Company.
- “Other operating expense – sustaining” is calculated as “Other operating expense” as reported on the consolidated
statement of operations, less other operating and reclamation and remediation expenses related to non-sustaining activities as
well as other items not reflective of the underlying operating performance of our business. Other operating expenses are
classified as either sustaining or non-sustaining based on the type and location of the expenditure incurred. The majority of
other operating expenses that are incurred at existing operations are considered costs necessary to sustain operations, and are
therefore classified as sustaining. Other operating expenses incurred at locations where there is no current operation or related
to other non-sustaining activities are classified as non-sustaining.
- “Reclamation and remediation - sustaining” is calculated as current period accretion related to reclamation and
remediation obligations plus current period amortization of the corresponding reclamation and remediation assets, and is intended
to reflect the periodic cost of reclamation and remediation for currently operating mines. Reclamation and remediation costs for
development projects or closed mines are excluded from this amount and classified as non-sustaining.
- “Exploration and business development – sustaining” is calculated as “Exploration and business development” expenses as
reported on the consolidated statement of operations, less non-sustaining exploration expenses. Exploration expenses are
classified as either sustaining or non-sustaining based on a determination of the type and location of the exploration
expenditure. Exploration expenditures within the footprint of operating mines are considered costs required to sustain current
operations and so are included in sustaining costs. Exploration expenditures focused on new ore bodies near existing mines (i.e.
brownfield), new exploration projects (i.e. greenfield) or for other generative exploration activity not linked to existing
mining operations are classified as non-sustaining. Business development expenses are considered sustaining costs as they are
required for general operations.
- “Additions to property, plant and equipment – sustaining” represents the majority of capital expenditures at existing
operations including capitalized exploration costs, capitalized stripping and underground mine development costs, ongoing
replacement of mine equipment and other capital facilities and other capital expenditures and is calculated as total additions to
property, plant and equipment (as reported on the consolidated statements of cash flows), less capitalized interest and
non-sustaining capital. Non-sustaining capital represents capital expenditures for major growth projects as well as enhancement
capital for significant infrastructure improvements at existing operations. Non-sustaining capital expenditures during the three
and nine months ended September 30, 2018, primarily relate to projects at Tasiast, Round Mountain, and Bald Mountain.
- “Portion attributable to Chirano non-controlling interest” represents the non-controlling interest (10%) in the ounces
sold from the Chirano mine.
- “Average realized gold price” is a non-GAAP financial measure and is defined as gold metal sales divided by the total
number of gold ounces sold. This measure is intended to enable Management to better understand the price realized in each
reporting period. The realized price measure does not have any standardized definition under IFRS and should not be considered a
substitute for measure of performance prepared in accordance with IFRS.
Cautionary statement on forward-looking information
All statements, other than statements of historical fact, contained or incorporated by reference in this
news release including, but not limited to, any information as to the future financial or operating performance of Kinross,
constitute ‘‘forward-looking information’’ or ‘‘forward-looking statements’’ within the meaning of certain securities laws,
including the provisions of the Securities Act (Ontario) and the provisions for ‘‘safe harbor’’ under the United States Private
Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this news
release. Forward-looking statements contained in this news release, include, but are not limited to, those under the headings (or
headings that include): “2018 third-quarter highlights”, “CEO Commentary”, “Operating results”, “Organic development projects and
opportunities”, “Balance sheet and financial flexibility”, “Outlook” and “Board Chair update” and include, without limitation,
statements with respect to our guidance for production, production costs of sales, all-in sustaining cost and capital expenditures;
the schedules and budgets for the Company’s development projects; and continuous improvement initiatives, as well as
references to other possible events, the future price of gold and silver, the timing and amount of estimated future
production, costs of production, capital expenditures, costs and timing of the development of projects and new deposits, success of
exploration, development and mining activities, currency fluctuations, capital requirements, project studies, mine life extensions,
permit applications and conversions, restarting suspended or disrupted operations; continuous improvement initiatives; and
resolution of pending litigation. The words “advance”, “anticipate”, “assumption”, “believe”, “estimates”, ‘‘expects’’,
“forecast”, “focus”, “forward”, “guidance”, “initiative”, “measures”, “on budget”, “on schedule”, “outlook”, “plan”,
“potential”, “progress”, “project”, “projection”, “promising”, or variations of or similar such words and phrases or
statements that certain actions, events or results may, could, should or will be achieved, received or taken, or will occur or
result and similar such expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a
number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently
subject to significant business, economic and competitive uncertainties and contingencies. The estimates, models and assumptions of
Kinross referenced, contained or incorporated by reference in this news release, which may prove to be incorrect, include, but are
not limited to, the various assumptions set forth herein and in our most recently filed Annual Information Form and our
Management’s Discussion and Analysis as well as: (1) there being no significant disruptions affecting the operations of the
Company, whether due to extreme weather events (including, without limitation, excessive or lack of rainfall, in particular, the
potential for further production curtailments at Paracatu resulting from insufficient rainfall) and other or related natural
disasters, labour disruptions (including but not limited to workforce reductions), supply disruptions, power disruptions, damage to
equipment, pit wall slides (in particular that the effects of the pit wall slides at Fort Knox and Round Mountain are consistent
with the Company’s expectations) or otherwise; (2) permitting, development, operations and production from the
Company’s operations and development projects being consistent with Kinross’ current expectations including, without limitation,
the maintenance of existing permits and approvals and the timely receipt of all permits and authorizations necessary for the
development and operation of the Tasiast Phase One and Phase Two expansions or any such alternate expansion that the Company
decides to pursue and the Round Mountain Phase W expansion including, without limitation, work permits, necessary import
authorizations for goods and equipment; commissioning and operation of the SAG mill at Tasiast; exploration license conversions at
Tasiast; and land acquisitions and permitting for the construction and operation of the new tailings facility, water and
power supply and launch of the new tailings reprocessing facility at Paracatu; (3) political and legal developments in any
jurisdiction in which the Company operates being consistent with its current expectations including, without limitation, the impact
of any political tensions and uncertainty in the Russian Federation and Ukraine or any related sanctions and any other similar
restrictions or penalties imposed, or actions taken, by any government, including but not limited to amendments to the mining laws,
and potential power rationing and tailings facility regulations in Brazil, potential amendments to water laws and/or other water
use restrictions and regulatory actions in Chile, new dam safety regulations, and potential amendments to minerals and mining laws
and energy levies laws, and the enforcement of labor laws in Ghana, new regulations relating to work permits, potential amendments
to customs and mining laws (including but not limited amendments to the VAT) and the potential implementation of a new tax code, in
Mauritania, and satisfactory resolution of the discussions with the Mauritanian government regarding the Company’s activities
in Mauritania, the potential passing of Environmental Protection Agency regulations in the US relating to the provision of
financial assurances under the Comprehensive Environmental Response, Compensation and Liability Act, the European Union’s General
Data Protection Regulation and potential amendments to and enforcement of tax laws in Russia (including, but not limited to, the
interpretation, implementation, application and enforcement of any such laws and amendments thereto), and the impact of any trade
tariffs being consistent with Kinross’ current expectations; (4) the completion of studies, including optimization studies, scoping
studies and prefeasibility and feasibility studies, on the timelines currently expected and the results of those studies being
consistent with Kinross’ current expectations; (5) the exchange rate between the Canadian dollar, Brazilian real, Chilean peso,
Russian rouble, Mauritanian ouguiya, Ghanaian cedi and the U.S. dollar being approximately consistent with current levels; (6)
certain price assumptions for gold and silver; (7) prices for diesel, natural gas, fuel oil, electricity and other key supplies
being approximately consistent with current levels; (8) production and cost of sales forecasts for the Company meeting
expectations; (9) the accuracy of the current mineral reserve and mineral resource estimates of the Company (including but not
limited to ore tonnage and ore grade estimates) and mine plans for the Company’s mining operations (including but not limited to
throughput and recoveries being affected by metallurgical characteristics at Paracatu), and the Company’s internal models; (10)
labour and materials costs increasing on a basis consistent with Kinross’ current expectations; (11) the terms and conditions of
the legal and fiscal stability agreements for the Tasiast and Chirano operations being interpreted and applied in a manner
consistent with their intent and Kinross’ expectations and without amendment or formal dispute (including without limitation the
application of tax, customs and duties exemptions); (12) goodwill and/or asset impairment potential; (13) the regulatory and
legislative regime regarding mining, electricity production and transmission (including rules related to power tariffs) in Brazil
being consistent with Kinross’ current expectations; (14) access to capital markets, including but not limited to maintaining a
debt rating consistent with the Company’s current expectations; and (15) that Kinross will integrate the Brazilian power plants,
and that they will operate, in a manner consistent with our current expectations. Known and unknown factors could cause actual
results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to:
sanctions (any other similar restrictions or penalties) now or subsequently imposed, other actions taken, by, against, in respect
of or otherwise impacting any jurisdiction in which the Company is domiciled or operates (including but not limited to the Russian
Federation, Canada, the European Union and the United States), or any government or citizens of, persons or companies domiciled in,
or the Company’s business, operations or other activities in, any such jurisdiction; fluctuations in the currency markets;
fluctuations in the spot and forward price of gold or certain other commodities (such as fuel and electricity); changes in
the discount rates applied to calculate the present value of net future cash flows based on country-specific real weighted average
cost of capital; changes in the market valuations of peer group gold producers and the Company, and the resulting impact on market
price to net asset value multiples; changes in various market variables, such as interest rates, foreign exchange rates,
gold or silver prices and lease rates, or global fuel prices, that could impact the mark-to-market value of outstanding derivative
instruments and ongoing payments/receipts under any financial obligations; risks arising from holding derivative instruments (such
as credit risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation
(including but not limited to income tax, advance income tax, stamp tax, withholding tax, capital tax, tariffs, value-added or
sales tax, capital outflow tax, capital gains tax, windfall or windfall profits tax, royalty, excise tax, customs/import or export
taxes/duties, asset taxes, asset transfer tax, property use or other real estate tax, together with any related fine, penalty,
surcharge, or interest imposed in connection with such taxes), controls, policies and regulations; the security of personnel and
assets; political or economic developments in Canada, the United States, Chile, Brazil, Russia, Mauritania, Ghana, or other
countries in which Kinross does business or may carry on business; business opportunities that may be presented to, or pursued by,
us; our ability to successfully integrate acquisitions and complete divestitures; operating or technical difficulties in connection
with mining or development activities; employee relations; litigation or other claims against, or regulatory investigations and/or
any enforcement actions or sanctions in respect of the Company (and/or its directors, officers, or employees) including, but not
limited to, securities class action litigation in Canada and/or the United States, or any investigations, enforcement actions
and/or sanctions under any applicable anti-corruption, international sanctions and/or anti-money laundering laws and regulations in
Canada, the United States or any other applicable jurisdiction; the speculative nature of gold exploration and development
including, but not limited to, the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves;
adverse changes in our credit rating; and contests over title to properties, particularly title to undeveloped properties. In
addition, there are risks and hazards associated with the business of gold exploration, development and mining, including
environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion
losses (and the risk of inadequate insurance, or the inability to obtain insurance, to cover these risks). Many of these
uncertainties and contingencies can directly or indirectly affect, and could cause, Kinross’ actual results to differ materially
from those expressed or implied in any forward-looking statements made by, or on behalf of, Kinross,including but not
limited to resulting in an impairment charge on goodwill and/or assets. There can be no assurance that forward-looking
statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such
statements. Forward-looking statements are provided for the purpose of providing information about management’s expectations and
plans relating to the future. All of the forward-looking statements made in this news release are qualified by these cautionary
statements and those made in our other filings with the securities regulators of Canada and the United States including, but not
limited to, the cautionary statements made in the ‘‘Risk Factors’’ section of our most recently filed Annual Information Form and
the “Risk Analysis” section of our full-year 2017 and third-quarter 2018 MD&A. These factors are not intended to represent a
complete list of the factors that could affect Kinross. Kinross disclaims any intention or obligation to update or revise any
forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking
statements, except to the extent required by applicable law.
Other information
Where we say ‘‘we’’, ‘‘us’’, ‘‘our’’, the ‘‘Company’’, or ‘‘Kinross’’ in this news release, we mean Kinross Gold Corporation
and/or one or more or all of its subsidiaries, as may be applicable.
The technical information about the Company’s mineral properties contained in this news release has been prepared under the
supervision of Mr. John Sims, an officer of the Company who is a “qualified person” within the meaning of National Instrument
43-101.
Source: Kinross Gold Corporation
1 Unless otherwise stated, production figures in this news release are based on Kinross’ 90%
share of Chirano production.
2 These figures are non-GAAP financial measures and are defined and reconciled on pages 13 to 17 of this news
release.
3 Net earnings/loss figures in this release represent “net earnings (loss) from continuing operations
attributable to common shareholders”.
4 Average realized gold price is a non-GAAP financial measure and is defined as gold metal sales divided by the
total number of gold ounces sold.
5 Attributable margin per equivalent ounce sold is a non-GAAP financial measure defined as “average realized gold
price per ounce” less “attributable production cost of sales per gold equivalent ounce sold.”